Web3 Security Trends: Analysis of Cyvers’ Report
The Web3 ecosystem traverses a dynamic security landscape as Q2 2024 draws to a close. An important change in attack vectors has occurred this quarter. The majority of significant crises have affected centralized exchanges (CEX), although decentralized finance (DeFi) protocols have demonstrated increased resistance.
Security events are thoroughly analyzed in a report by blockchain security company Cyvers. The consequences of these incidents on the economy, their effect on different market areas, and modifications to hacker strategies are all highlighted in the report.
Web3 Ecosystem Faces $1.38 Billion in Losses
Crypto damages resulting from assaults have dramatically increased, according to the Cyvers Web3 Security Report for Q2 and H1 2024. On the Web3 ecosystem, the paper highlights noteworthy events, evolving assault tactics, and operational and financial impacts.
- As of H1 2024, there has been a whopping $1.38 billion in cryptocurrency losses year to date, with $629.68 million experienced across 49 occurrences in Q2 2024.
- The fact that this number has increased significantly from 2023 to this time frame emphasizes how risks in the Web3 ecosystem are dynamic and ever-present.
But the losses are more than just monetary. The second quarter’s security issues had a profound and broad impact on the economy. Due to the increased regulatory attention following the high-profile CEX hacking, exchanges may have to comply with more stringent regulations and incur more operating expenses. These incidents have also severely damaged the reputations of the affected companies and raised legal costs as they work to hold the criminals accountable.
Geographical trends in Web3 cybersecurity threats were also highlighted in the Cyvers team’s quarterly report. A spike in activity was observed in Eastern Europe, while regulatory gaps and lax cybersecurity legislation in Asia-Pacific exposed centralized exchanges to targeted attacks. Conversely, the DeFi protocols in North America exhibited more robustness, probably as a result of strict security and compliance controls.
Security Breaches Shift from DeFi to CeFi: 900% Increase in Q2 2024 Losses
Access control incidents, which mostly targeted centralized exchanges, saw a noticeable shift in security breaches in Q2 2024. This signaled a departure from using DeFi protocols’ smart contract weaknesses for malicious purposes. By comparison, smart contract exploits dropped by 83%, and access control exploits rose by 35% from H1 2023.
An important shift in attacker focus is indicated by the sharp 900% rise in CeFi losses over Q2 2023. This pattern could be explained by the concentration of assets on centralized platforms and possibly inadequate security in certain exchanges. The DMM Bitcoin event is used as an example by the Cyvers team.
- A big cyberattack that occurred in May 2024 cost $305 million to the Japan-based centralized exchange.
- This was the third-biggest breach in cryptocurrency history and the biggest to hit the blockchain since December 2022.
- Recovery attempts were complicated by the hack’s transfer of 4502.9 BTC (more than $308 million) to many addresses.
- The transfer’s nature was not immediately apparent. DMM Bitcoin, however, verified that there had been a security breach and launched an inquiry.
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